New kids on the block: How to launch an online casino brand in New Jersey

Words by Julian Rogers 

New egaming launches are like buses. You wait ages for one and two suddenly come along at once. First up was Scores Media, which owns adult entertainment venues across the US, with the unveiling of ScoresCasino.com at the end of July in New Jersey. Scores AC was once situated in the Trump Taj Mahal, so it seems bosses believe they can target this demographic – namely, males with disposable income that frequent gentlemen’s clubs.

Hard on the heels of this launch, MGM Resorts International unleashed an online casino and poker room with playMGMcasino.com and playMGMpoker.com in early August. The platform is powered by GVC and supported by iOS and Android apps. Interestingly, though, this is the first time the land-based operator, which owns the Borgata Hotel Casino in Atlantic City, has associated its iconic brand with online gaming.

Yet, MGM didn’t storm into the Garden State all guns blazing. Instead, it was a fairly muted launch with very little fanfare. This could have been a deliberate strategy and perhaps an acknowledgement that MGM is unlikely to usurp the incumbents anytime soon. In a note, Adam Krejcik, principal at analyst firm Eilers & Krejcik Gaming, described MGM’s entrance as “a whimper” despite the unveiling coming slightly ahead of schedule.

“The launch itself was a relatively quiet affair with very light press and promotion around the platform,” he wrote. “The operator has yet to roll out an affiliate program or other key marketing pieces that have been deployed by other operators in the state. The launch did not appear to move the needle in terms of traffic at the Borgata/Party/MGM online poker network.”

The ace up MGM’s sleeve is that by owning a string of properties across the US, it is a huge, household name in the world of gambling. The business is also renowned for fostering loyalty and generating repeat business thanks to its award-winning M life Rewards program, which went live at the Borgata in June. “There is no better player in the gaming industry than MGM when it comes to loyalty,” says Rob Gallo, president of online gaming consultancy Peak Gaming Group. “If they can tie in their online gaming activity to their M life Rewards program, I think they can be a long-term player in the online gaming space in New Jersey. Although they are late to the game, their brand does carry a lot of clout and they are very good at marketing their brand, so I think they will hold their own.”

Atlantic City located on the Jersey shore is a resort city on Absecon Island in Atlantic County, New Jersey. Atlantic City is known for its two mile long boardwalk, gambling casinos, great nightlife, beautiful beaches, and the Miss America Pageant

A different approach

What is noteworthy regarding both launches is the contrasting routes to market both brands have taken. MGM is operating as a standalone brand under Borgata’s Internet Gaming Permit (IGP), while Scores is functioning as a tightly integrated affiliate of Pala Interactive’s PalaCasino.com, which also utilizes Borgata’s license.

The arrangement with Pala Interactive means that the Scores brand doesn’t appear to count towards the IGP limit of five per license holder, though, strangely, Scores is included on the Division of Gaming Enforcement’s (DGE) list of authorized sites. Nevertheless, Krejcik suggests that Scores’ approach could refashion the thinking for new brands considering entering New Jersey, and that – at least to a certain degree – it uncaps the previous ceiling for the number of brands that can operate on a IGP.

As well as using Pala Casino’s software, the library of games, user interface and loyalty program at ScoresCasino.com is pretty much identical to PalaCasino.com. The only differentiation is the Scores branding. A Scores-branded poker site is also in the pipeline and will be part of the Pala Poker Network, which was rolled out in June.

However, the fact that Scores doesn’t boast a casino property in Atlantic City could prove to be a handicap. Moreover, the company being involved in the adult entertainment business could well deter some players from signing up, particularly females. This could be why Scores has placed a professional-looking video on the homepage showing young people of both sexes playing table games and slots in a real-life casino environment.

Perhaps unsurprisingly, Gallo, who owned OmniCasino.com and SunPoker.com until 2010, envisages contrasting fortunes ahead for the new entrants. “It will be an uphill battle, but it will come down to branding and marketing. I think MGM has the brand recognition needed to make their online gaming business a success, but, in my opinion, Scores will not gain the traction needed to make a long-term success of their online gaming affiliation.

While sex and gambling are two vices that have an overlap of demographics, they often do not convert users from one to the other. Back in the day when I ran an online casino in the late ’90s and early 2000s, we had advertising affiliations with some of the largest sex sites on the web and the player conversion rates were terrible.”

Sweet success

Although MGM and Scores are playing catch up, the late start doesn’t mean they can’t have an impact and start making up ground. This time last year, almost three years after the initial wave of sites entered New Jersey, SugarHouse Casino in neighboring Philadelphia, Pennsylvania, launched PlaySugarHouse.com on Golden Nugget’s license.

During its first 12 months, revenues grew over 20% month over month, according to Rush Street Interactive, the developer and operator of PlaySugarHouse.com. (Rush Street Interactive also built SugarHouse’s free-to-play Casino4Fun website.) An established brand and a unique product were key ingredients in the growth of PlaySugarHouse.com so far, the software developer says.

“Our casino in Philadelphia has a strong brand in the region and is actually closer to more New Jersey residents than the Atlantic City casinos, so we knew that was an important part of the mix,” Rush Street Interactive COO Mattias Stetz tells EGR NA.

“We also took the decision early to invest in our own software, hence a contributor to the late entry. Our hypothesis was that we could not enter the market with a similar product to our competition – we focused on differentiating our user experience.” Stetz adds: “It’s definitely challenging to enter the market late and especially with a new platform, but our players tell us they appreciate the unique features we bring to the table.”

Indeed, the first 12 months have very much been used to “test and learn,” says Stetz. And by not being shackled by the constraints of being reliant upon a casino platform provider, Rush Street Interactive was able to create a look and feel that has been likened to a video games lobby.

Having full control has meant being able to introduce unique features, such as its proprietary 12-hand blackjack game allowing up to 12 different bets on every deal. “We have the flexibility to keep innovating on our own terms, which is crucial in such a competitive market as New Jersey,” Stetz explains.

Before SugarHouse’s arrival, Resorts Casino and Mohegan Sun Casino launched real-money casino sites in 2015 under Resorts’ interactive license. These brands are both generating around $3m a month in casino revenue, which is around a 50% rise on last year. It’s worth noting that all three brands – Resorts, Mohegan Sun and SugarHouse – didn’t cannibalize existing industry revenues but instead brought incremental growth to the online casino market.

Monthly revenues across the entire market were more than $20m in July – the fifth consecutive month the $20m mark has been breached. In fact, the New Jersey online gambling sector is on course to hit $250m in 2017, with online casino up 20% in July compared with 12 months previously. Poker, though, continues to look like a busted flush. Indeed, there were already probably too many poker sites even before PokerStars NJ arrived in March 2016.

A screenshot of the SugarHouse site

On the limit

Including MGM and Scores, there are now 16 online casino brands and seven poker sites on four networks, which is in stark contrast to the reduction of brick-and-mortar casinos from 12 to seven since regulated online gaming began in 2013. Whether a state with six million residents over the age of 21 can sustain all these online sites is questionable. Yet Gallo remarks: “As a lifelong marketer, I have never believed in the saturation of any market. Do you own a refrigerator? Does everyone you know own a refrigerator? Do they still sell refrigerators?”

But things could get even more crowded soon. Hard Rock, which bought the Trump Taj Mahal from Tropicana Casino owner Carl Icahn, is expected to launch a digital offering. Another possible entrant is TEN (formerly Revel), which already has social casino Play.TenACNJ.com powered by GAN. Even Pennsylvania’s Foxwoods, Parx or Penn National could join the party in preparation for when egaming is finally given the green light in the Keystone State.

“So far we are seeing that the overall market is growing,” says Stetz, “but if the number of brands are growing faster than the overall market then simple math will tell you that market shares will change.” But just like the land-based casino industry in New Jersey, there will inevitably be a natural ebb and flow of gaming operations, suggests Gallo. “Some will succeed, some will fail and others will enter the market to stake their claim. Only time will tell, but I can assure you it will get more expensive in the future in the marketing fight for customers’ mind share in the gambling arena. That will become the key factor between success and failure.

“When I started in the online casino space, the CPA was $20 per player. When I sold in 2010, it was $375. Even as great a brand as MGM has, it will become more and more expensive to acquire and retain good profitable players. Luckily, they have deep pockets.” With online casino still showing further growth is certainly possible, MGM has every chance of grabbing market share and expanding the market without cannibalizing existing revenue elsewhere.

And if Scores’ affiliate arrangement with Pala bears fruit, then we could see other brands with no connection to the gambling industry follow suit. All eyes will be on figures released by the DGE over the coming months to assess how these new entrants are performing and whether New Jersey really has reached saturation point.

MGM International Resorts and Scores Media declined our invitations for interviews.